Leader Blues

Thursday, January 24, 2008

TOP STORY >> First Electric gives $6.4 million back

By JOHN HOFHEIMER
Leader senior staff writer

First Electric Cooperative, based in Jacksonville, mailed about 72,000 checks worth about $6.4 million to its members earlier this month, according to Neal Frizzell, vice president of marketing communications.

Of that amount, about $3 million was a distribution of “margin,” the difference between what it cost the co-op to buy, service and deliver the power and the greater amount members were charged on their annual bills. If First Electric were a publicly traded corporation, the margin would have represented profit and might have been returned to shareholders as dividends, he said.

“Historically as part of the electric co-op, we refund capital credits—the members’ share of remaining revenues. That’s refunded to membership on rotating basis. This year, that money was sent to people who were co-op members in 1982-83 and also in 2006.”

The second pool of money was about $3.4 million, and is proportionate refund of overcharges against Entergy, which supplies much of the power on the Arkansas Electric Cooperative service grid.

AEC sued Entergy alleging that company overcharged for its electricity, charges First Electric and Arkansas Electric cooperatives passed on to their customers between July 2004 and September 2006, Frizzell said.

First Electric is one of 17 member cooperatives of Arkansas Electric Cooperative. In all, $31 million was refunded as a result of that suit before the Federal Energy Regulatory Commission. Of that, Entergy was ordered to refund $22 million to Arkansas Electric Cooperative.

Entergy co-owns some power plants with Arkansas Electric Cooperatives, the wholesale power supplier. The suit arose over disagreements over operational charges and expenses.

Members whose overall refund exceeds $10 received a check, he said. Those due less than $10 refunds got a credit to their accounts. Frizell said whether a customer qualifies for one or both refunds, it is lumped into one check per member.

In this area, First Electric serves customers in north Pulaski County, much of Lonoke County, southern White County and western Prairie County, he said.

At at time when energy costs are rising, First Electric has no rate increases on the drawing board, he said.